How does Streak email tracking work from Gmail to Gmail?

Based on information from their site it appears that they are using 1st method. Especially after reading the following

Justin W2 weeks ago 
support@streak says: 
Gmail recently made a change that causes image requests to 
lose all their identifying information. What this means is 
that email opens from a Gmail account will show up as anonymous.

Found at http://blog.streak.com/2013/11/unlimited-email-tracking-for-gmail-with.html

This means that whoever opens your email has download images disabled that will mean that tracking fails. In case of another Gmail subscriber reading the message Google will automatically protect their information.

So to prevent people from tracking you make sure to disable automatic picture download.

Than I would take advice from Google when you go Incognito mode, this relates to websites, ads and etc tracking you not other people using streak.

Going incognito doesn't affect the behavior of other people, servers, or software. Be wary of:

  • Websites that collect or share information about you
  • Internet service providers or employers that track the pages you visit
  • Malicious software that tracks your keystrokes in exchange for free smileys
  • Surveillance by secret agents
  • People standing behind you

I don't have the reputation points to reply to SaUce's answer but there are some things to add.

  1. It still works. Yes, views show up as anonymous, however one can still see what type of device and how many unique views an email got. So what if you can't see the name of who viewed your email- chances are (surprise) it's the person you sent the email to. Since you can see unique users its still possible to see how widely your recipient has shared your message, again, you won't know their names.

  2. Concur that tracking is via image downloads. Verified by test emails to a friend.